China bets big on Industrial IoT

Article By : Yorbe Zhang

Efforts to lay out China's IIoT are still embryonicm but thanks to the IIoT application environment, the sector is growing faster than consumer IoT.

China is pushing hard to develop the Industrial Internet of Things (IIoT) in the country.

The Chinese government projects the country’s Industrial Internet of Things to grow to RMB450 billion (about $65 billion) by 2020—occupying roughly one quarter of China’s whole IoT market. The IIoT segment in China has maintained a growth rate of more than 25%.

[China IIoT 01 (cr)]
__Figure 1:__ *Growth forecast of China’s IIoT (Source: China’s Ministry of Industry and Information Technology)*

At present, Chinese enterprises whose status can be described as Industrial 3.0 know they need a lot of improvements, especially in cost control, production efficiency and process management.

Nevertheless, the Chinese government is betting big on IIoT.

In the context of encouraging energy conservation and green environmental protection, China has fostered a process of manufacturing upgrades in recent years. Based on the IoT "Sensing China" proposition in 2009, China’s Ministry of Industry and Information issued in 2012 the "Internet of things 12th Five-Year Development Plan.” China’s Premier Li Keqiang signed the China version of "Industry 4.0" in 2015, with a goal to extend it to "Made in China 2025.”

The proposal of "Made in China 2025" integrates the digitisation of information technology and manufacturing technology into the process and combines them with intelligent manufacturing, laying groundwork for future development. In the next 10 years, the goal is to transform China from “a manufacturing big house” to “a manufacturing super house.”

China's IIoT industrial chain consists mainly of component suppliers (such as sensors, RFID, chips, etc.), system integrators, internet operators (data transmission) and service platform providers.

Efforts to lay out China's IIoT are still embryonic. Still, thanks to the IIoT application environment and a concentrated demand for apps, China’s IIoT sector is growing faster than that of consumer IoT applications. For the moment, the big winners from this trend are component manufacturers and system integrators. As the industry grows, demand for services will increase and network operators and service platform providers will look for bigger profits, potentially turning them into a major power behind the IIoT market.

One of the clear indicators of IIoT in China can be illustrated in the growth of manufacturing equipment for numerical controls (NC). Such equipment is more widely used by large-scale enterprises. The NC market for manufacturing equipment is expected to increase 3.3% annually during China’s "13th Five-Years."

[China IIoT 02 (cr)]
__Figure 2:__ *Growth of manufacturing equipment for numerical controls (NC). (Source:China Industrial Information Network)*

IIoT comes in various forms in China, including intelligent production processes, massive customisation, cloud manufacturing platforms, collaborative manufacturing and collaborative innovation platforms, B2B industry e-commerce and intelligent product development tools.

Industrial enterprises use internet technology and connectivity actively to reform production processes and product forms to improve quality and efficiency. They also leverage enterprise services offered by the internet service industry. The expectation is that China’s internet services and industrial applications will grow hand in hand, feeding off each other and creating diversified applications.

For example, Haier uses an interconnected factory business model. The consumer electronics giant integrates users’ diversified needs and demands, interacts with users and invites them to participate in the design and manufacture of the process.

The idea is that "consumers" become “creators.” The company's Shenyang refrigerator interconnected factory has developed a flexible mass customisation/manufacturing process, supporting nine platforms and more than 500 models.

This interconnected factory has three components. First, customisation integrates users’ varied needs while transforming the process from inventory production to user creation.

Second, interconnection with users in real time ranges from product research to product manufacturing, suppliers and logistics providers. It covers the whole process and integrates the whole supply chain.

Third, by visualising the whole process, users get to experience the product creation process in real time.

Next: IIoT growing faster than consumer IoT in China »

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